It is understood the action relates to broadcasts in which Hadley criticised Mr Smith over comments he allegedly made regarding a child sex case involving Father Finian Egan, who was a friend of Mr Smith.

At the time, media outlets, including ABC TV's 7.30, aired allegations Mr Smith had said a woman who had made sexual abuse claims against Father Egan was just after a $1 million payout.

Mr Smith has said he did not recall saying those words and would never suggest a victim of sexual abuse was motivated by a desire for cash.

Father Egan, a retired Catholic priest, has been charged with 20 child-sex offences against boys and girls while a priest to parishes in Sydney and on the central coast in the 1970s and '80s.

Mr Smith used to attend Father Egan's church in Carlingford and thanked him in his inaugural speech to Parliament for his ''Irish wit and pastoral devotion to his flock''.

Yesterday, a spokeswoman for Mr Smith said ''discussions between the parties are continuing''.